Calcutta High Court
Kotak Mahindra Bank Ltd vs The Official Liquidator on 29 September, 2015
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
OD-6
CA No.198 of 2015
CP No.45 of 1986
IN THE HIGH COURT AT CALCUTTA
Original Jurisdiction
THE ALUMINUM MANUFACTURING COMPANY
LIMITED (IN LIQUIDATION)
And
KOTAK MAHINDRA BANK LTD.
Vs
THE OFFICIAL LIQUIDATOR, HIGH COURT
Appearance:
Mr. Joy Saha, Adv.
Mr. Aniruddha Roy, Adv.
Ms. Sreetama Manna, Adv.
...for Kotak Mahindra Bank.
Mr. Anuj Singh, Adv.
Mr. S. Bhattacharya, Adv.
Mr. A. Sarkar, Adv.
...for IIBI.
Mr. Ranajit Chowdhury, Adv.
Ms. Tanushree Dasgupta, Adv.
...for the official liquidator.
Mr. Shamit Sanyal, Adv.
...SBI
Mr. B.K. Jha, Adv.
...Workmen
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
Date : September 29, 2015.
The Court : This is an application by an assignee of a secured creditor of the company in liquidation, Kotak Mahindra Bank, which has taken over the interest of Uco Bank.
Several of the secured creditors of the company in liquidation are represented, including Industrial Investment Bank of India (in voluntary liquidation) and State Bank of India. Two other secured creditors of the company in liquidation are not represented despite the Official Liquidator making them aware of 2 the present proceedings: West Bengal Financial Corporation and ICICI Bank.
The company was sold as a going concern, which implied that the liabilities of the company qua its employees were taken over along with its assets by the purchaser. The consideration was paid. The effect of such sale has been discussed threadbare in an order dated February 15, 1993 passed on CO No. 8121 (W) of 1989 and does not call for any repetition. Such order found that the workmen of the company in liquidation could not make any claim in respect of the consideration paid by the purchaser of the company as a going concern.
The Official Liquidator now holds about Rs.1.11 crore to the credit of the company in liquidation. After the Official Liquidator settled the claims of the secured creditors by indicating the pro rata entitlement of the secured creditors, disbursements have been made by IIBI which held the funds paid by the purchaser of the business of the company. IIBI says that the secured creditors of the company in liquidation were first paid a total sum of Rs.80 lakh and then, the balance of Rs.70 lakh together with the interest accrued thereon. IIBI reports that ICICI Bank has not turned up to receive its share of about Rs.4.82 lakh that IIBI still holds on its behalf.
It is now necessary for the amount held by the Official Liquidator to be disbursed to the secured creditors. The claims of unsecured creditors cannot be entertained since the entire 3 complement of the dues of the secured creditors are not being cleared or they have got or ultimately will get only a fraction of their entitlement.
The Official Liquidator will also be entitled to retain the expenses incurred on account of liquidation. Such expenses must be retained by the Official Liquidator before disbursing the balance pro rata to the secured creditors in accordance with their entitlement.
The Official Liquidator will first issue notices to ICICI Bank and to WBFC. The Official Liquidator will call upon ICICI Bank to receive the payment from IIBI upon executing the indemnity that the other secured creditors have executed. The Official Liquidator will fix a time within which ICICI Bank should obtain the payment from IIBI; or the money will come to the Official Liquidator or into the general pool for disbursement to the other secured creditors of the company in liquidation.
Within four weeks from date, the Official Liquidator will forward to all the secured creditors of the company in liquidation the particulars of the expenses incurred by the Official Liquidator on account of liquidation, the pro rata entitlement of the parties from the balance held by the Official Liquidator (after notionally deducting the amount claimed as expenses by the Official Liquidator) and the other steps that may be necessary for the liquidation proceedings to be brought to an end by striking off the name of the company. Within four weeks of 4 the issuance of such letter to the secured creditors, the Official Liquidator will convene a meeting of all the secured creditors of the company in liquidation, whereat the secured creditors will approve, to the extent permissible, the amount to be retained by the Official Liquidator on account of liquidation expenses and the balance amount to be disbursed pro rata to the secured creditors.
This application will appear ten weeks hence for the Official Liquidator and the secured creditors to report on the completion of the measures indicated above.
The workers of the company in liquidation are represented and they claim that they are entitled to be paid out of the funds held by the Official Liquidator in view of Section 529A of the Companies Act, 1956 and the fact that they have not been paid their dues qua the company in liquidation. Such argument is rejected as it is devoid of merit and, in any event, barred by res judicata in view of the order dated February 15, 1993 passed on CO No. 8121 (W) of 1989.
Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(SANJIB BANERJEE, J.) sg.